U.S. Stocks Climb, Trying to Extend Winning Streak
April 07 2020 - 12:30PM
Dow Jones News
By Xie Yu, Anna Hirtenstein and Caitlin McCabe
U.S. stocks rose sharply Tuesday, buoyed by early indications
that the spread of the coronavirus pandemic was slowing in some hot
spots around the world.
The Dow Jones Industrial Average rallied 2.8% in midday trading,
a day after rising almost 8%. The S&P 500 and the Nasdaq
Composite also jumped, climbing 2.3% and 1.5% respectively. All
three indexes are attempting to rally for the third time in four
sessions, though they remain down about 20% from their mid-February
highs.
New York Gov. Andrew Cuomo said Tuesday that the state's
hospitalization rate has showed signs of slowing, and other
hard-hit countries in Europe, including Italy and Spain, have
reported a slowdown in new infections following strict containment
measures.
"It's hard to reject the view that things are improving," said
Paul O'Connor, head of multiasset at Janus Henderson. "Markets have
been celebrating this in the last couple of days."
Still, the trends are preliminary and authorities have warned
that the coronavirus infections in the U.S. and U.K. are likely to
worsen in the coming week. Even as demand for intensive care units
has flattened in New York, Mr. Cuomo said Tuesday that deaths
related to the virus hit a record Monday. So far, nearly 5,500
people have died from the virus in the state, representing almost
half of all U.S. deaths.
Even more, economic indicators have shown that a deep recession
may be looming. The Mortgage Bankers Association said Tuesday that
mortgage forbearance requests grew 1,896% between the weeks of
March 16 to March 30. The spike comes as millions of Americans have
sought unemployment benefits after the pandemic shuttered
businesses.
Markets have swung sharply in recent weeks as investors have
tried to make sense of a fast-spreading pandemic that has warranted
unprecedented responses by the Federal Reserve and U.S. government.
Monday's gain marked the 12th consecutive trading day that the Dow
moved up or down at least 1%.
All 11 sectors of the S&P 500 marched higher Tuesday. Only
two of the 30 stocks in the Dow Jones Industrial Average, Merck and
Pfizer, ticked lower.
Travel and leisure stocks were again among the best performers
in the U.S. and Europe. United Airlines Holdings jumped 8.3%,
American Airlines Group rose 15% and Delta Air Lines added 4.2%.
Among cruise stocks, Royal Caribbean Cruises gained 21% and
Carnival rose 17%. All five stocks remain down more than 50% for
the year.
Meanwhile, in London, EasyJet soared 20% after the carrier
tapped a U.K. government-aid program for short-term credit. The
company's ability to access the funding suggests that it could
withstand the economic downturn, provided that the spread of the
coronavirus continues to slow, according to Michael Hewson, chief
market analyst at brokerage CMC Markets.
"Markets are pricing in a return to normality for airlines
sooner rather than later," Mr. Hewson said. That optimism is also
driving hotel stocks higher, he added.
The rise in risk appetite led some investors to sell the safest
government bonds. The yield on the 10-year U.S. Treasury note rose
to 0.749%, from 0.675% Monday. Yields rise as bond prices fall.
Oil prices also ticked higher, with the global benchmark Brent
crude advancing 0.3% to $33.15 a barrel.
In currency markets, the ICE Dollar Index slipped 0.7%. The
greenback has been wavering amid renewed risk appetite, according
to Jordan Rochester, a currency strategist at Nomura.
"It's definitely a risk-on day," leading some investors to sell
the dollar, he said.
Elsewhere, the pan-continental Stoxx Europe 600 advanced 1.9%,
and major Asian stock benchmarks closed higher. Japan's Nikkei 225
and China's Shanghai Composite both rose more than 2%.
"People are trying to identify risks and opportunities now,"
said Bruce Pang, head of macro and strategy research at China
Renaissance Securities. The outbreak's arc in China shows that the
new coronavirus and measures to contain it would lead to slower
growth, rising unemployment, sluggish demand, disrupted supply
chains and more defaults, he cautioned.
At the same time, "China's case shows when new infections peaked
out, the market would bottom out," and this is what global
investors now expect, Mr. Pang added.
Write to Xie Yu at Yu.Xie@wsj.com, Anna Hirtenstein at
anna.hirtenstein@wsj.com and Caitlin McCabe at
caitlin.mccabe@wsj.com
(END) Dow Jones Newswires
April 07, 2020 12:15 ET (16:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.